Do you have a PLAN B?

 

We all know there are risks in any type of investments.

The biggest risk is that our original plan isn’t working out – in one way or another!

 

One big problem this pandemic has brought to many landlords is that the rents has reduced significantly in some areas, such as central London.

Another example is that short term accommodation strategies (serviced accommodations, holiday lets) are not working very well due to COVID-19, especially in cities that used to get many traveller and tourists.

But another potential danger is still slowly happening. We are in recession now and the furlough scheme is coming to an end. Many people will lose their jobs in the next few months or one year. A big risk for landlords is that their tenants might start having trouble to pay rent.

 

If you are getting into property investing or already have rental properties, do you have a PLAN B for the above scenarios?

 

I was reading my favourite property investment magazine YPN the other day and there was a section on ‘Supported living’ and ‘Social Housing’ – which could work very well as a hedge against some of the issues above.

If you haven’t heard of the strategy before, you should definitely give it a thought.

GET YOUR 1^st COPY of YPN FOR FREE HERE

And you can read the section on ‘Supported Living’ and ‘Social Housing’ in Issue 149.

 

To investing for maximum return and minimum risk,

Emma

*I can give you the step-by-step action points you need to take, to build an extra £2000/month income through property within 6-12 months – CLICK HERE to book a free strategy session with me.

9 Important Members of Your Power Team

 

If you are just starting out on property investing, you are probably already feeling the loneliness of this journey.

Unlike working in a corporate environment, you don’t have colleagues that you can speak to on a daily basis, or a manager that you can go to for advice.

Your property business is your own business. When you are just starting out, most investors don’t have a team. They are just on their own, probably trying to do everything on your own too.

Just to show you how much difference a good power team can make, I’ll tell you my own story.

When I first started investing in North of England, I had to travel up there every other weekend. The train journey was 2.5 hours each way. (Driving would take even longer.) I had to do that because I wanted to get to know the area in detail, but also because I didn’t have a local team that I could rely on. You can imagine how tired that made me and how much time and money I spent on the train journeys.

Now I have a local team built up and I have bought the last few properties without having to go there at all myself. In fact I haven’t been up there in the past 5 years!

So Who’s in the Team?

Exactly which property experts are in your team depends on your specific strategy. But generally speaking, the following people would provide valuable expertise to your property business.

-        Letting Agent

For researching the area and renting out/managing your properties.

-        Estate Agent

For sourcing and selling properties.

-        Conveyancing solicitor

For processing the legal side of your property purchases and uncovering issues that needs resolving.

-        Surveyor

For property valuations and reports.

-        Mortgage broker

For finding you the best financing products.

-        Accountant

For filing your tax returns and optimising your profit retention.

-        Insurance broker

For sourcing the right level of cover to safeguard your assets and business.

-        Tradesman/Builder

For refurbishment or development.

-        Mentor/Coach

For knowledge/skills and support, someone to keep you accountable.

 

Have questions regarding how to build up your power team, or simply how best to move forward in general?

CLICK HERE to book a free strategy session with me.

 

To finding great people to push you along the way,

Emma

Which is better? – Short-term VS Long-term rental strategies?

 

As I mentioned in my previous article, I get asked quite often whether they should start with Rent to Rent, or Rent to Serviced Accommodations. I know a lot of you can’t make up your mind on which strategy is best for you.

 

Let’s have a look at the two strategies closely today.

 

Similarity

 

With both strategies, you don’t need to have large sums of capital to buy and own a property. You lease a property, then rent out on short term (Rent to serviced accommodations) or long term (Rent to rent) basis. So you don’t have the hassle or risk associated with owning properties, such as mortgages, property prices going down etc.

 

Differences

 

The major difference is that Rent to rent is where you rent out the units long term, and Rent to accommodations is where you rent out the units on shorter term.

 

This means that you can usually charge a premium price with short term rental, but you would also suffer from vacancy and seasonal changes.

 

The regulations are also different with short term and long term. Long term accommodations are usually of primary residential nature; whereas short term accommodations are usually considered of commercial nature. So long term accommodations are subject to the relevant tenancy laws. Short term accommodations sometimes require a change of use through planning application (90 day rule in London for example).

 

Pros and Cons

 

	Pros	Cons
Rent to rent/ LT	- No risk associated with owning property - Market is more stable and predictable - No planning required - Less objection from landlords regarding 'overuse' of property	- Can't charge a premium price - Harder to find deals that achieve your target profit - Need to reference and manage tenancies - Higher requirements regarding property types
Rent to Serviced accommodations/ST	- No risk associated with owning property - Can charge a premium price - Easier to find deals that can achieve your target profit - More property types can be suitable	- Can be affected more by seasons and economic fluctuations and pandemics! - Need to beware of the 90 day rule in London and apply for planning - Higher occupant turnover so requires more management and cleaning

 

Conclusions

 

Ultimately, both strategies are great cash flow strategies for those who don’t want to invest large sums of capital, or who don’t want the risks of owning properties. Usually Rent to rent deals can be turned into serviced accommodations (with planning if permitted) and potentially achieve higher profit. With Rent to Serviced accommodations deals, you may not achieve as much profit if you end up having to fill the units with long term occupants (like during this pandemic).

I believe in having a PLAN B in all my investments. Always make sure you have at least 2 exit strategies that are profitable.

You can even mix and match your long and short term rental deals in your portfolio eventually. But when you are first starting out, make sure you FOCUS on ONLY ONE strategy so you get skilled at it. Once you have mastered one strategy, you can pick up the other one more easily.

 

Need Help? – Ask Me Now HERE

 

Have you made up your mind yet? ;)

Emma

*I can give you the step-by-step action points you need to take, to build an extra £2000/month income through property within 6-12 months – CLICK HERE to book a free strategy session with me.

Getting started in property investing through Short Let?

 

Quite a few of my students have asked me about the opportunity in Short let – the official term is Serviced Accommodations.

 

The principle of Serviced Accommodations is that you can charge a premium to people staying short term (or sometimes short to medium terms) and provide accommodations with more services than basic residential lettings. You can run it like a hotel, or like serviced apartments. 

 

A common question I have heard from my students and other property investors using the Rent to Rent strategy is that: if a Rent to Rent deal can make me £700-£1000/ month, why can’t I turn it into Serviced Accommodations (i.e. Short let) and make much much more?

 

Or another version of essentially the same question is that: if it takes me x amount of effort to get a decent Rent to Rent deal, why can’t I aim to get a Serviced Accommodations deal with the same profit instead but with less effort?

 

The answer to the first question is – you can. Provided that you comply to the 90 day rule in greater London. (If you want to rent out a residential property for over 90 days in London, you need to obtain planning permission.)

 

The answer to the second question is more complex. Technically you can. And it probably is easier to find properties that can make you £700-£1000/ month if you use a premium rent. However, the difference here is risk. If you are relying on achieving a premium rent to make your target profit, your business could run into cash flow trouble if this factor is affected (by pandemic for example, or season, or anything else).

 

I will write an article comparing the two strategies in more details later this week – as I know a lot of you are sitting on the fence undecided between the two strategies.

 

Rent in a lot of prime areas (for example central London) are heavily discounted at the moment due to pandemic and lockdown. This can be a rare lifetime opportunity to pick up some great deals, whether you want to do short let or long let.

 

Use adversity to your advantage,

Emma

6 questions to ask your local letting agent for the most accurate area research

I hope you found my last post useful. I talked about the 9 things you should never miss in high level desktop research into your investing area.

Let’s go one step further in this post, where I want to share with you one of the most important elements of field research – Speaking With Local Letting Agents.


Local letting agents is the starting point of your field research and local information hub. If they have been in business for a few years, they should know the areas pretty well.


I’ve shortlisted 6 questions below you should ask the local letting agent. This will allow you to quickly identify you opportunities in the area.
 

1. What are the best rental areas?

2. What is the most demanded property type in each ‘best rental area’? (Terraced, flat, detached etc.)

3. What rent can you achieve for the most demanded property type?

4. What is the typical tenant profile for each ‘best rental area’?

5. What’s their preferred spec of the rental properties? (Furnished vs unfurnished, modern vs old school etc.)

6. What are the area/streets to avoid?

Always do your desktop and field research hand in hand. Use the tools I shared in the last email (Rightmove/Zoopla/Google for high level, PropertyData for more details) along with local letting agents, to create a full picture of your potential investing area.

Oh – and give yourself a deadline :)

Emma

*I can give you the step-by-step action points you need to take, to build an extra £2000/month income through property within 6-12 months – CLICK HERE to book a free strategy session with me.

9 things you should NOT miss when choosing an investing area

 In my last post, I talked about the danger of doing TOO MUCH research.

In this post, I want to share what to cover in your area desktop research, to avoid doing too little research.

Here are the 9 things to check when considering an area to invest in, and how to do a quick high level assessment:
 

1. Typical property types

Is the ‘average’ property in this area terraced houses, or flats? How many bedrooms are the most common? Are they Victorian conversions or ex-local properties? Just by browsing through Rightmove, you should get a rough idea.
 

2. Average rents for the above typical property types

For each ‘typical property type’, what is the average rent? Again, you can get a rough idea from Rightmove or Zoopla.
 

3. Sales prices for the above property types

For each ‘typical property type’, what is the last sold price and price moves over the past few years. You can find this on Rightmove.
 

4. Gross yield for each property type

With each of the ‘typical property types’, do a quick calculation of the Gross yield. Gross yield = Annual rent/ Sales price
 

5. Know your area by postcode

You should ideally know your area by postcode – sometimes two postcodes right next to each other could be the best and worst investing areas. I used a tool called PropertyData to get data by postcode. Very useful and worth paying a small price for, especially in the beginning of your property journey. Definitely check it out if you are serious about investing in property.
 

6. Is this area ‘up and coming’ or ‘slowly dying’?

You can pretty much just Google this one. What are the news related to this area (city/borough)? What are people’s first impression of this area when mentioned? I know I have advised against reading too much news on property investing. This one is different. What you want to know is ‘other people’s opinion’ towards this area – because what they think impacts whether they want to rent or buy there.
 

7. How far is it from where you live?

This is a realistic question. In the beginning, you will inevitably be travelling to this area frequently, before you build up a trustable team. This is also true if you use a sourcing company. You still need to know your area to be able to tell a good deal from a bad one. And don’t just check the distance on Google map. Check the actual time required to get there considering your chosen way of transport.
 

8. The nearest major employer hub

A quick Google on this one should do. The purpose is to gauge the whether there will be a stable supply of potential tenants to the area, and the tenant profiles.
 

9. Variety of local demographics

It’s always good to invest in areas with a variety of local demographics who could become your potential tenants. So search for any university, major employer (see point above) in the area. And don’t forget that local families are always a good source of potential tenants (except for central London).


To summarise, the above 9 things should never be missed. At the desktop stage, you can start with doing a high level quick assessment before you decide to focus on a particular area. Google, Rightmove, Zoopla, PropertyData have been my best tools and resources – make use of them!


Happy data crunching :)
Emma

*I can teach you how to build an extra £2000/month income through property within 6-12 months – CLICK HERE to book a free strategy session with me.

Are you thinking too much?

 We all know the importance of carrying out thorough research before any major investment.

But do you know that thinking too much is not contributing to your success, but only taking you further away from your goals.

Hard to believe? Read on…


Analysis causes paralysis. This is especially true for people who are analytical, academic, and data driven. People have a natural tendency to fall into attempting to do either too much or too little research. We all know too little research is no good. But today let’s dig a bit deeper in the damage of doing too much research.

I was this type of person from an analytical education and corporate career background. I would enjoy collecting data, more information, news, learning new things on the topic. And this just never ended. I would always discover some more ‘research to do’.

Then I got sucked into this and never moved on from the research stage. And the more data I had, the more I needed to analyse and the less confident I got to actually make a decision or take any action.


Solution:

Over the years, I found an easy way to break this vicious cycle. It seems so simple in hind sight but you really need someone to tell you that this works at the time.

The best thing to do is to set yourself a timeline, by which you HAVE TO make a decision, or take an action.

Surprisingly simple right? But you might worry if you will have done enough research by the deadline. The truth is, given your analytical nature, you will be ‘carrying out research’ all the time anyway. As long as you give yourself a reasonable time frame, you should trust that the amount of research you will have done by then is sufficient.

And it took me a while to get used to this. As I had to resist worrying about making a ‘bad’ decision. What I have realised over the years is, a ‘not so great’ decision is better than ‘no decision’ (as long as you have a firm and safe bottom line that you should never breach).

Now I believe the worst thing in life is stagnation, not making mistakes. If you are the type of person that tend to overthink, try the method above – set yourself a timeline by which you have to do something. Whether it is 1 week, 2 weeks, 1 month, make sure you stick to that deadline.

Warning: Do make sure that you have a systematic approach to your research though, so that you will have covered the important items before the deadline. You shouldn’t spend too much time researching, but do make sure what needs to be done is done.


Watch out for my next email, where I will share what you should cover in your desktop research for your investing area.


To moving forward,
Emma

*I can teach you how to build an extra £2000/month income through property within 6-12 months – CLICK HERE to book a free strategy session with me.